The opinion
Cite as 2021 Ark. App. 236
Elizabeth Perry ARKANSAS COURT OF APPEALS
I attest to the accuracy and
integrity of this document DIVISIONS III AND IV
2023.06.27 13:55:26 -05'00'
No. CV-19-324
2023.001.20174
ST. BERNARDS COMMUNITY Opinion Delivered: May 12, 2021
HOSPITAL CORPORATION D/B/A
CROSSRIDGE COMMUNITY APPEAL FROM THE CROSS
HOSPITAL COUNTY CIRCUIT COURT
APPELLANT [NO. 19CV-17-192]
V. HONORABLE E. DION WILSON,
JUDGE
TERRY CHENEY, IN HIS CAPACITY REVERSED AND REMANDED
AS SPECIAL ADMINISTRATOR OF
THE ESTATE OF SANDRA CHENEY,
DECEASED; CHARLES KING BIBBY,
M.D.; WYNNE MEDICAL CLINIC,
P.A.; JAMES DONALD CATHEY, M.D.;
ZACHARY LLOYD STEVENSON,
M.D.; AND ELIZABETH A. RAMSEY,
R.N.
APPELLEES
KENNETH S. HIXSON, Judge
This case involves the defense of charitable immunity raised by a hospital. The
appellee, the estate of Sandra Cheney, deceased 1 (Cheney), filed a lawsuit alleging
negligence and medical negligence against St. Bernards Hospital Corporation d/b/a
CrossRidge Community Hospital (CrossRidge), three physicians, and several John Doe
defendants. CrossRidge filed a motion for summary judgment arguing it was entitled to
charitable immunity. The trial court denied the motion for summary judgment, finding
1
Terry Cheney, in his capacity as special administrator of the estate of Sandra Cheney,
deceased.
that there are material issues of disputed facts as to whether the doctrine of charitable
immunity applies. CrossRidge appealed. We hold that the trial court erred in finding that
there were material facts in dispute, and we reverse and remand for the trial court to decide
whether CrossRidge is entitled to charitable immunity on the undisputed facts.
Sandra Cheney was a patient at CrossRidge and died in the care of the hospital after
experiencing septic shock and associated system failure. After her death, her husband was
appointed as special administrator of her estate and sued CrossRidge and several other
doctors and entities for negligence and medical negligence in their care and treatment of
Ms. Cheney. 2
St. Bernards Community Hospital Corporation is incorporated under the Arkansas
Non-Profit Act, operating several health-care facilities including doing business as
CrossRidge Community Hospital. 3 CrossRidge operates an acute care hospital located in
Wynne, Arkansas, and provides emergency and acute hospital care to citizens of Cross
County, Arkansas, and surroundings areas. Gary Sparks is the administrator of CrossRidge.
CrossRidge filed a motion for summary judgment claiming it was immune from suit
based on the doctrine of charitable immunity. CrossRidge attached supporting exhibits that
included its articles of incorporation and bylaws, an independent auditor’s report, its
2
The others sued include Wynne Medical Clinic, P.A.; Dr. James Donald Cathey,
M.D.; Dr. Zackary Lloyd Stevenson, M.D.; Charles King Bibby, M.D.; Elizabeth A.
Ramsay, R.N.; John Does Insurers 1–10; and John Does 1–10.
3
St. Bernards Healthcare, Inc. (SBHC) is the parent company of all St. Bernards
entities, including CrossRidge. SBHC is not a party to this litigation; however, Harry
Hutchison is the vice president and chief financial officer of SBHC and submitted an
affidavit and a deposition regarding the financial matters of CrossRidge.
2
financial statements, its financial-assistance policy, and confirmation from the Internal
Revenue Service of CrossRidge’s tax-exempt status. CrossRidge also attached the affidavit
of Harry Hutchison. 4 In his affidavit, Hutchison stated:
2. I am the Vice President and Chief Financial Officer at St. Bernards Healthcare,
Inc. (‘‘SBHC”). In this capacity, I manage financial matters affecting SBMC, St.
Bernards Hospital, Inc., d/b/a St. Bernards Medical Center (‘‘SBMC’’), and St.
Bernards Community Hospital Corporation, d/b/a CrossRidge Community
Hospital (“CrossRidge”). I am knowledgeable as to the organizational and
operational status of all three entities.
3. SBHC, SBMC, and CrossRidge are charitable, non-profit corporations. The
Craighead County Circuit Court affirmed SBHC’s charitable status on July 28, 2016,
and it has affirmed SBMC’S charitable status six times in the past seventeen years.
4. CrossRidge is a critical access hospital located in Wynne, Cross County, Arkansas.
SBHC formed CrossRidge in 1999. Since Cross County is considered a Health
Professional Shortage Area, CrossRidge envisions itself as the county’s “indispensable
provider of healthcare.”
5. CrossRidge’s stated mission is “to provide Christ-like healing to the community
through education, treatment, and health services.” Accordingly, CrossRidge’s
Articles of Incorporation set forth that the hospital is a public-benefit corporation
operated exclusively for charitable, religious, scientific, and educational purposes.
6. Like SBHC and SBMC, CrossRidge qualifies for tax-exempt status as a charitable
organization pursuant to Section 501(c)(3) of the Internal Revenue Code.
7. Approximately seventeen percent (17%) of Cross County’s population consists of
people over the age of sixty-five (65). In the most recent Community Health Needs
Assessment, the median income in the county was $18,919, while the median income
in Arkansas was $28,554. Due to these factors, Cross County residents are at a higher
risk of developing cardiovascular disease and other diseases whose prevalence
increases due to poor diet, unhealthy behaviors, and lack of knowledge. Since health-
promotion activities in the county are such a high priority, CrossRidge offers free
community health screenings and education sessions.
8. In furtherance of its mission, CrossRidge also voluntarily provides free and
discounted services to indigent patients at the same level of care provided to those
4
Hutchison later gave a deposition wherein he expounded on the information in his
affidavit.
3
who are able to pay. From 2015 to 2017, the cost of charity care provided by
CrossRidge was $1,819,984 (which represents 292% of CrossRidge’s net income
over that period). CrossRidge does not pursue collection of accounts that qualify as
charity care.
9. CrossRidge sets an annual budget to ensure good business practices and,
consequently, to further and sustain its charitable mission. To the extent any monies
received from patients or other sources are in excess of CrossRidge’s operational
costs, CrossRidge returns those monies to the organization’s resources to perpetuate
its charitable community benefit of providing medical assistance to the public.
Specifically, CrossRidge reinvests its surplus to offset inflation, stay abreast of new
technology, obtain state-of-the-art equipment, and improve the ability of the hospital
to provide healthcare for the citizens of Cross County. Moreover, none of this
surplus inures to the benefit of any director, officer, or other person.
10. From 2015 to 2017, CrossRidge returned its total surplus of $623,243 to the
organization’s resources. CrossRidge’s profit margins for those years were,
respectively: (.01%); 1.33%; and 1.34%. In 2015 and 2016, CrossRidge dedicated a
total of $1,584,425 to purely charitable services, which was more than five-times its
net income during that period.
11. Due to its limited Net Patient Service Revenue, CrossRidge depends on
contributions for its continued existence. In the past four years (2013-2017),
CrossRidge has received $10,032,852 in contributions, primarily through grants.
Without these contributions, CrossRidge would have incurred substantial losses.
12. CrossRidge’s directors are not compensated for their work, and only SBHC
compensates CrossRidge’s executives. With the exception of Gary Sparks, who is
CrossRidge’s Administrator, CrossRidge’s executives serve in the same positions for
SBHC and SBMC and are compensated accordingly. To ensure compensation is
within the market rate, a nationally recognized compensation firm annually reviews
executive salaries. SBHC sets Executive Salary Ranges below the fortieth percentile
nationally.
Cheney opposed CrossRidge’s motion for summary judgment, contending that there
were issues of material fact in dispute. A hearing was held on CrossRidge’s summary-
judgment motion, and the trial court took the motion under advisement. The trial court
subsequently entered an order denying the motion for summary judgment. In its order, the
trial court found:
4
The court having considered all the pleadings and evidence on file, received the
arguments of counsel and considering the law and the facts applicable thereto, the
court finds that there are material disputed facts as to whether the doctrine of charitable
immunity applies in this case. . . . Therefore, the motion for summary judgment is
. . . denied[.]
(Emphasis added.) The trial court did not advise the parties which material facts it found to
be in dispute.
CrossRidge timely appealed from the trial court’s order denying summary judgment.
CrossRidge argues on appeal that it established entitlement to summary judgment on the
basis of charitable immunity.
The essence of the charitable-immunity doctrine is that organizations such as agencies
and trusts created and maintained exclusively for charity may not have their assets diminished
by execution in favor of one injured by acts of persons charged with duties under the agency
or trust. George v. Jefferson Hosp. Ass’n, 337 Ark. 206, 987 S.W.2d 710 (1999). Charitable
immunity is immunity from suit, not simply immunity from liability. See Low v. Ins. Co. of
N. Am., 364 Ark. 427, 220 S.W.3d 670 (2005). Immunity from suit is an entitlement not
to stand trial or face the other burdens of litigation, while immunity from liability is a mere
defense to a suit. See Robinson v. Beaumont, 291 Ark. 477, 725 S.W.2d 839 (1987). Because
the charitable-immunity doctrine favors charities and results in a limitation of potentially
responsible persons whom an injured party may sue, we give the term “charitable
immunity” a narrow construction. Williams v. Jefferson Hosp. Ass’n, 246 Ark. 1231, 442
S.W.2d 243 (1969).
As an initial matter, we must address Cheney’s argument that the trial court’s order
denying CrossRidge’s summary-judgment motion is not an appealable order. We disagree.
5
Cheney cites the general rule that the denial of a motion for summary judgment is neither
reviewable nor appealable. See Martin v. Hallum, 2010 Ark. App. 193, 374 S.W.3d 152.
However, our court has routinely reviewed and decided orders in cases where the trial court
has refused to grant summary judgment based on the defense of charitable immunity. See
Progressive Eldercare Services-Saline, Inc. v. Cauffiel, 2016 Ark. App. 523, 508 S.W.3d 59;
Progressive Eldercare Services-Saline, Inc. v. Garrett, 2016 Ark. App. 518; Gain, Inc. v. Martin,
2016 Ark. App. 157, 485 S.W.3d 729; Ark. Elder Outreach of Little Rock, Inc. v. Thompson,
2012 Ark. App. 681, 425 S.W.3d 779.
In Thompson, supra, we explained that the general rule does not apply when the refusal
to grant a summary-judgment motion has the effect of determining that the appellant is not
entitled to its defense of immunity from suit because the right of immunity from suit is
effectively lost if a case is permitted to go to trial. Thompson, 2012 Ark. App. 681, at 4, 425
S.W.3d at 783; see also Ark. R. App. P.–Civ. 2(a)(2) (providing that an appeal may be taken
from an order that in effect determines the action and prevents a judgment from which the
appeal might be taken). We acknowledge that in White River Health Systems, Inc. v. Long,
2018 Ark. App. 284, 551, S.W.3d 389, cited by Cheney, we created a narrow exception to
this rule when the order denying summary judgment on charitable immunity specifically
bifurcates the charitable-immunity issue and the liability issue. However, this exception
does not apply here because in the order denying CrossRidge’s summary-judgment motion,
the trial court did not bifurcate the proceedings. Therefore, the order denying summary
judgment is appealable.
6
Having concluded that the order is appealable, we now turn to the relevant factors
in deciding the charitable-immunity issue. In Masterson v. Stambuck, 321 Ark. 391, 902
S.W.2d 803 (1995), the supreme court delineated several factors to determine whether an
organization is entitled to charitable immunity. These factors are:
(1) whether the organization’s charter limits it to charitable or eleemosynary
purposes; (2) whether the organization’s charter contains a “not-for-profit”
limitation; (3) whether the organization’s goal is to break even; (4) whether
the organization earned a profit; (5) whether any profit or surplus must be
used for charitable or eleemosynary purposes; (6) whether the organization
depends on contributions and donations for its existence; (7) whether the
organization provides its services free of charge to those unable to pay; and
(8) whether the directors and officers receive compensation.
Id. at 401, 902 S.W.2d at 809. These factors are illustrative, not exhaustive, and no single
factor is dispositive of charitable status. Id. at 401, 902 S.W.2d at 810. This court has also
held that a pivotal issue in determining one’s entitlement to charitable immunity is whether
the charitable form has been abused. See Watkins v. Elder Outreach of Little Rock, 2012 Ark.
App. 301, 420 S.W.3d at 477. After Watkins and its progeny, this court has consistently
engaged in an analysis of whether there has been abuse of the charitable-immunity form
when deciding charitable-immunity cases. See, e.g., Progressive Eldercare Services-Saline, Inc.
v. Cauffiel, 2016 Ark. App. 523, 508 S.W.3d 59.
The standard for whether to grant summary judgment in a charitable-immunity case
was set forth by our supreme court in Anglin v. Johnson Regional Medical Center, 375 Ark. 10,
15, 289 S.W.3d 28, 31 (2008): “The law is well settled that summary judgment is to be
granted by a circuit court when it is clear that there are no genuine issues of material fact to
be litigated, and the party is entitled to judgment as a matter of law.” The current state of
7
the law in such cases, however, was elucidated in the supreme court’s recent decision in
Davis Nursing Home Ass’n v. Neal, 2019 Ark. 91, 570 S.W.3d 457. 5
In Neal III, the supreme court held that although disputed fact issues concerning an
organization’s charitable status may be presented to a jury, the ultimate question of charitable
immunity is a matter for the court to decide. Here is the operative language in Neal III:
In some cases, while there may be fact issues involved, they are not matters of
disputed fact. Rather they are differing legal interpretations of undisputed facts. In
such cases, the circuit court should grant summary judgment where reasonable
persons would not reach different conclusions based upon those undisputed facts.
....
If the existence of charitable immunity turns on disputed factual issues, then the jury
may determine the facts, and the circuit court will subsequently determine whether
those facts are sufficient to establish charitable immunity.
Neal III, 2019 Ark. 91, at 6–8, 570 S.W.3d at 461–62 (citations omitted).
The threshold question in the Neal III framework is whether there are disputed
material facts or whether there are undisputed facts with differing interpretations. If there
are disputed material facts regarding charitable immunity, then summary judgment is
improper because these disputed facts must be determined by a jury. If, however, there are
undisputed facts and merely differing interpretations of those facts, then summary judgment
is proper if reasonable persons could not reach different conclusions based on those
undisputed facts.
5
For the sake of clarity, we acknowledge there are three appellate decisions regarding
the dispute between Davis Nursing Home Association and Neal. These are Davis Nursing
Home Ass’n v. Neal, 2015 Ark. App. 478, 470 S.W.3d 281; Davis Nursing Home Ass’n v.
Neal, 2018 Ark. App. 413, 560 S.W.3d 485; and Davis Nursing Home Ass’n v. Neal, 2019
Ark. 91, 570 S.W.3d 457. We will refer to Davis Nursing Home Ass’n v. Neal, 2019 Ark.
91, 570 S.W.3d 457, as “Neal III.”
8
In this case, the trial court denied CrossRidge’s motion for summary judgment after
finding that there were disputed material facts on the issue of charitable immunity.
However, for the reasons expressed infra, we conclude that the trial court erred in finding
that there were disputed material facts. Rather, our review of the record reveals that the
facts in this case were undisputed with merely different interpretations. 6 Therefore, in the
summary-judgment proceeding, the trial court should have determined whether
CrossRidge was entitled to charitable immunity on these undisputed facts.
A review of the Masterson factors as they relate to the evidence presented is necessary
in determining whether CrossRidge is entitled to summary judgement on the charitable-
immunity issue. The first two factors are (1) whether the organization’s charter limits it to
charitable or eleemosynary purposes; and, (2) whether the organization’s charter contains a
“not-for-profit” limitation. Here, CrossRidge’s articles of incorporation provide that
CrossRidge is a corporation organized “exclusively for charitable, religious, scientific, and
educational purposes.” CrossRidge is tax exempt and its bylaws state that CrossRidge has
powers “granted by the Ark. Non-Profit Corp. Act of 1993.” They also state that
CrossRidge shall not engage in activities inconsistent with federal nonprofit tax status.
These facts were not disputed.
Factor (3) is whether the organization’s goal is to break even; and factor (4) is whether
the organization earned a profit. Harry Hutchison did not testify that CrossRidge’s goal
was strictly to break even. However, Hutchison did testify that the hospital struggles to
6
We note that the only testimony presented came from SBHC’s CFO, Harry
Hutchison.
9
break even and does not have a significant surplus. In his affidavit, Hutchison stated that
the hospital had profit margins of (0.1%), 1.33%, and 1.34% for the years 2015–2017.
Hutchison indicated that SBHC keeps the hospital solvent and pays the vendors for
CrossRidge. He stated that when there are funds available, CrossRidge will transfer those
funds back to SBHC dollar for dollar to offset the amount SBHC paid for CrossRidge’s
bills. He stated that, without the funding from SBHC, CrossRidge could not operate. In
his affidavit, Hutchison stated that CrossRidge’s total combined surplus for 2015–2017 was
$623,243, which was all returned to SBHC.
In meeting proof with proof, Cheney offered no evidence to attack Hutchison’s
testimony. Instead, Cheney only offered an argument that CrossRidge does show a surplus,
and that it discounts its numbers by payments to entities with joint ownership, which it
admits are separate and distinct. In response to this argument, CrossRidge cites George v.
Jefferson Regional Medical Center, 337 Ark. 206, 987 S.W.2d 710 (1999), in support of its
contention that the existence of a profit is not determinative of charitable status. In George,
the supreme court stated that trying to break even is only one factor and certainly not a
dispositive one when applied to a hospital. The court reasoned that “running a small surplus
should not be seen as totally incompatible with charitable status” because “[m]odern
hospitals are complex and expensive, technological, economic and medical enterprises that
can ill afford to come short of even in their financial integrity.” 337 Ark. at 213, 987 S.W.2d
at 713.
Our review of the evidence as applied to the third and fourth factors reveals no
material facts in dispute. Rather, the facts are undisputed and may be subject to different
10
interpretations. That being so, these were issues to be decided by the trial court—instead
of being submitted to a jury—under the Neal III framework.
The fifth factor is whether CrossRidge must use any profits or surplus for charitable
purposes. CrossRidge’s articles and bylaws state that no part of its net earnings will inure to
the benefit or be distributable to any of its directors, officers, or other private persons.
Hutchison stated that any profits are returned to the organization’s resources to perpetuate
its charitable-community benefit of providing medical assistance to the public. Hutchison
stated that CrossRidge reinvests its surplus to offset inflation, stay abreast of new technology,
obtain state-of-the art equipment, and improve the hospital’s ability to provide healthcare
for the citizens of Cross County. Cheney does not contest these facts but argues that
Hutchison’s statements strongly favor the denial of CrossRidge’s motion for summary
judgment. In Progressive Eldercare Services-Saline, Inc. v. Krauss, 2014 Ark. App. 265, we
stated that the nursing home’s use of profits for building improvements and operating
expenses was a factor for the court to weigh and to determine if this use furthered charitable
purposes. Similar to factors three and four, we conclude that there are no disputed facts that
relate to factor five but instead that the parties have differing interpretations of the
undisputed facts.
The sixth factor requires an inquiry into whether CrossRidge depends on
contributions and donations for its existence. Hutchison testified that over the past four
years CrossRidge received more than $10,000,000 in contributions, which were primarily
through government grants. He conceded that CrossRidge received only a small amount
of private donations, which he said amounted to only $96,198 in 2016. Hutchison also
11
stated that SBHC has had to fund CrossRidge’s operations in order for the hospital to
survive.
However, our supreme court has stated that “a modern hospital, with rare
exceptions, would find it extremely difficult to operate wholly or predominantly on
charitable donations. The fact that a non-profit medical provider relies on funding sources
other than contributions or donations cannot negate its overriding charitable purpose.”
George, 337 Ark. at 214, 987 S.W.2d at 714. It is evident that there were no facts in dispute
under the sixth factor, and the supreme court has made it clear that simply because a hospital
relies on sources other than contributions or donations does not necessarily negate its
charitable status. Again, the parties have differing interpretations.
The seventh factor is whether CrossRidge offers services free of charge to those
unable to pay. CrossRidge directs us to its financial-assistance policy, which states:
In accordance with its stated mission, [CrossRidge] is committed to providing
financial assistance to people who are uninsured, underinsured, ineligible for a
government program, or otherwise unable to pay for emergency and other medically
necessary care. [CrossRidge] will provide care of emergency medical conditions to
individuals regardless of their ability to pay.
In providing education, treatment, and healthcare services [CrossRidge] believes
financial matters are secondary to the rendering of these services. No person who
seeks these services is turned away. [CrossRidge] assists needy patients including the
truly “indigent” who have no ability to pay and no outside payment sources, eligible
patients whose resources or outside payment sources are not sufficient to adequately
cover their care, and those who have the ability to pay but require the extension of
credit.
Hutchison’s affidavit stated that from 2015 to 2017, the cost of charity care provided by
CrossRidge was $1,819,984, which equates to 292% of its net income over that period.
Hutchison was careful to explain that this was not the forgiveness of bad debt but was the
12
amount expended for low-income patients who did not have the ability to pay. Hutchison
explained that the charity extended by CrossRidge is consistent with its financial-assistance
policy. Hutchison stated that CrossRidge never pursues legal action against a charity patient.
He also stated that, during the same three-year time frame, CrossRidge separately listed
$1,153,968 in bad debt but that this debt was a result of patients who could pay their bills
but nonetheless refused to pay. CrossRidge argues that it satisfied factor seven because it
provides free and discounted services to those who are unable to pay.
In meeting proof with proof, Cheney offered no evidence to attack Hutchison’s
testimony on the seventh factor. Instead, Cheney only offered an argument that
CrossRidge’s policy to provide emergency medical care regardless of a patient’s ability to
pay merely equates to CrossRidge’s doing something that it is already required to do
pursuant to federal law. See 42 U.S.C. § 1395dd. Essentially, Cheney contends that an
emergency charge for a patient who cannot pay is classified as “bad debt” and then
CrossRidge converts the bad debt into “charity,” which allows it to avoid tort liability as a
charitable entity. However, the parties here are arguing for different interpretations of
undisputed facts, which is an issue to be determined by the trial court.
The eighth factor is whether CrossRidge’s directors and officers receive
compensation. CrossRidge’s directors are not compensated, but it does not dispute that its
officers are compensated. CrossRidge compensates its administrator, Gary Sparks, with
annual compensation of around $180,000. CrossRidge also pays for 4.35% of the salaries of
CFO Hutchison and the CEO, Chris Barber. These facts are not in dispute, but our
supreme court has held that it is not necessary for charitable organizations to have entirely
13
volunteer staff and management. See George, supra. Again, Cheney has a different
interpretation of these undisputed facts.
Finally, although not listed as one of the Masterson factors, this court has held that
another relevant consideration is whether the charitable form has been abused. See Watkins,
supra. With respect to this issue, the only argument raised by Cheney is that CrossRidge’s
profit motive and anti-charitable behavior is best demonstrated by its collection practices
and treatment of Medicaid recipients with injuries arising from automobile accidents.
However, CrossRidge’s collection practices in this regard are not in dispute. In such cases,
CrossRidge does not immediately accept the Medicaid benefits but instead pursues
subrogation efforts with respect to the injured person’s tort claims when there may be third-
party insurance coverage. In Hutchison’s testimony, he made it clear that no collection
efforts are taken against the Medicaid patient, and he explained that this collection method
was simply a way of attempting to find some sort of payment source. CrossRidge argues
that it is required to take such collection efforts before submitting a claim to Medicaid and
that this does not alter its undisputed profit margins or demonstrate anti-charitable behavior.
Here, again, there are not disputed facts; rather, there are different interpretations of
undisputed facts.
Having reviewed the evidence, we hold that the trial court erred in finding that there
were material disputed facts with respect to CrossRidge’s claim of charitable immunity.
Our conclusion is not necessarily that it was error to deny summary judgment on the merits
of charitable immunity but rather that the trial court erred in deciding that the issue of
charitable immunity would proceed to trial. Applying the framework outlined by the
14
supreme court in Neal III, supra, we conclude that this case involves differing legal
interpretations of undisputed facts. In such cases, the trial court should grant summary
judgment when reasonable persons could not reach different conclusions based on the
undisputed facts. Neal III, supra. Therefore, we reverse and remand for the trial court to
decide, on the undisputed facts, whether CrossRidge is entitled to charitable immunity.
Reversed and remanded.
VIRDEN and WHITEAKER, JJ., agree.
HARRISON, C.J., concurs.
GLADWIN and BROWN, JJ., dissent.
BRANDON J. HARRISON, Chief Judge, concurring. I join the majority opinion
but do so with some hesitation. The hesitancy resides chiefly in the decision to remand the
case to the circuit court so that it can determine whether to confer charitable immunity
upon CrossRidge. The appearance of the “abuse of the corporate form” factor, in a case
far outside the context in which that factor was first created and applied, also gives me pause.
The majority opinion holds that there is no genuine issue of material fact in dispute.
I agree. Consequently, the only remaining question is this: “Given the facts, should
CrossRidge receive charitable immunity?” Today we remand the case so that the circuit
court will answer this binary yes-or-no question. This is not the most efficient way forward.
This court could answer that question right now, however the votes may fall. A remand is
not precluded by law for any reason I can see; but nor is a remand required in my view of
the law.
15
As a practical and theoretical matter, the party who disapproves of the circuit court’s
decision on remand, whatever it may be, will have to pursue a second appeal on the same
topic (charitable immunity) if the aggrieved party hopes for a different result in round two.
Assuming for the sake of argument that CrossRidge receives charitable immunity on
remand, then Special Administrator Cheney could appeal that decision. This court would
then review de novo the circuit court’s second immunity-related decision. But what
criterion or criteria would guide us as we determined whether the circuit court erred in
round two? We will have no more material facts then than we do now. We will to a high
degree of confidence have the same caselaw in round two that we do here in round one.
Why wait? The same of course holds true if Special Administrator Cheney prevails in round
two, meaning the circuit court decides not to immunize CrossRidge. If that happens, then
the hospital can appeal, and we have the same situation I just mentioned.
Perhaps the Arkansas Supreme Court will one day clarify that an appellate court
should decide to confer immunity or not if it has decided that there are no genuine issues
of material fact in dispute. Deciding the ultimate question in the first appeal avoids two
appeals. I see no need to construct a process that requires two appeals to decide one legal
issue (immunity) if the ultimate question is ripe for a final answer in the first appeal. This
just makes sense when an appellate court has all it needs in the first appeal to go the distance
and declare a “final answer” on the ultimate question. See White River Health Sys., Inc. v.
Long, 2018 Ark. App. 284, at 9, 551 S.W.3d 389, 393 (Harrison, J., dissenting) (The process
and procedure relating to charitable-immunity decisions should be simpler and more
streamlined.).
16
The second point that gives me pause in the majority’s opinion—though to a lesser
degree than the disposition—is the increasingly widespread use of what I have previously
called the “ninth factor,” also known as the “abuse of the corporate form” factor. This
court created that factor and added it to the eight Masterson factors in Watkins v. Arkansas
Elder Outreach of Little Rock, Inc., 2012 Ark. App. 301, 420 S.W.3d 477. It is worth pointing
out that the Arkansas Supreme Court has not yet formally adopted or applied the so-called
ninth factor. Progressive Eldercare Servs.-Saline, Inc. v. Cauffiel, 2016 Ark. App. 523, at 11,
508 S.W.3d 59, 67 (Harrison, J., concurring). In fact, in the most recent case from our
supreme court on charitable immunity, the court did not reference the “abuse of the
corporate form” factor; instead, it kept to the eight Masterson factors. See, e.g., Davis Nursing
Home Ass’n v. Neal, 2019 Ark. 91, 570 S.W.3d 457 (Neal III) (addressing only the eight
Masterson factors).
The ninth factor has gained some steam here today because the majority opinion
addresses it. I understand why it did so. Nonetheless, it is worth stating that the “abuse of
the corporate form” factor was created in, and applied to, a highly specific record while
reviewing a business entity’s convoluted corporate structure and weblike operations. See
Watkins, supra. My point is that the “abuse of the corporate form” factor should not be
applied as a matter of course to every entity that seeks charitable immunity. Unless and
until the Arkansas Supreme Court adopts the “abuse of the corporate form” factor and
directs that it must be applied to every charitable-immunity case, I hesitate to give it more
influence than it deserves.
17
* * *
Despite the stated reservations, I join the majority’s decision to direct the circuit
court to decide on remand whether CrossRidge is entitled to receive charitable immunity.
And the circuit court must do so based on the record as it existed when the circuit court
denied CrossRidge’s motion for summary judgment.
WAYMOND M. BROWN, Judge, dissenting. The majority is of the opinion the
circuit court erred in its finding that there are disputed facts as to whether the doctrine of
charitable immunity applies. Having concluded this case involves only the legal
interpretation of undisputed facts, the majority remands the case to the circuit court to enter
judgment on the merits of the charitable-immunity issue. For the following reasons, I
respectfully dissent from the majority opinion.
In Davis v. Neal, our supreme court set forth the standard of review we are bound to
follow in reviewing these charitable-immunity cases on summary judgment. 1 In that case,
the court explained:
[I]n some cases, while there may be fact issues involved, they are not matters of disputed
fact. Rather they are differing legal interpretations of undisputed facts. . . . In such cases,
the circuit court should grant summary judgment where reasonable persons would not
reach different conclusions based upon those undisputed facts.
....
If the existence of charitable immunity turns on disputed factual issues, then the jury
may determine the facts, and the circuit court will subsequently determine whether those
facts are sufficient to establish charitable immunity. 2
1
2019 Ark. 91, at 6–8, 570 S.W.3d 457, 461–62 (Neal III).
2
Id. at 6–8, 570 S.W.3d at 461-62.
18
Frequently in these charitable-immunity cases, the facts are not in dispute. Nevertheless,
our supreme court has deemed summary judgment inappropriate when reasonable persons
could reach different conclusions based on undisputed facts. Clearly, summary judgment is
even less appropriate when there are disputed issues of material fact.
Here, the circuit court determined that summary judgment was not appropriate
because there were material facts in dispute as to whether the doctrine of charitable
immunity applies. I would affirm the circuit court because there are several Masterson factors
upon which reasonable minds could disagree. I direct your attention to factors (3), (4), (5),
(7), and (8): (3) whether CrossRidge’s goal is to break even; (4) whether CrossRidge earned
a profit; (5) whether any profit or surplus must be used for charitable purposes; (7) whether
CrossRidge provides its services free of charge to those unable to pay; and (8) whether
CrossRidge’s directors and officers receive compensation.
Regarding factors (3) and (4), CrossRidge admits that it does not strictly seek to
break even; however, in evaluating the Masterson factors, our court has held that the lack of
a profit in a long-standing business could cause reasonable minds to question whether an
entity is truly operating at a deficit each year or simply creating a presumption of a deficit. 3
The affidavit of CrossRidge’s chief financial officer reflects that CrossRidge’s operations do
not support the total costs of running the hospital and is currently running on a deficit of $4
million despite being incorporated since 1999. In light of our prior holding and the facts
before our court, I would find that reasonable minds could differ on whether CrossRidge
3
Neal v. Davis Nursing Ass’n, 2015 Ark. App. 478, 470 S.W.3d 281 (Neal I).
19
is truly operating at a deficit and thus is a factual question in dispute precluding summary
judgment.
Similarly, regarding factor (5), we have held that a question of fact remains as to
whether reinvesting profits, as CrossRidge admittedly does, is sufficient to show that it uses
profits and surplus for charitable purposes. 4 Therefore, I would hold that whether
CrossRidge’s reinvestment can be characterized as perpetuating its charitable-community
benefit of providing medical assistance to the public is a factual question on which reasonable
minds could disagree. Additionally, factor (8)—whether CrossRidge’s officers and directors
are compensated—involves a determination of what constitutes “reasonable” because
CrossRidge’s officers admittedly receive compensation for services rendered, and it has long
been held that whether something is reasonable is a question of fact precluding summary
judgment. 5
Whether CrossRidge provides its services free of charge to those unable to pay (factor
7) is where I find the greatest source of discord with the majority’s opinion. Here we have
an entity whose financial assistance policy (FAP) states that it employs external collection
agencies to pursue collection actions against patients who do not pay. To be clear, the FAP
expressly states as follows:
[CrossRidge] and its external collection agencies may also take any and all legal actions
including, but not limited to, telephone calls, emails, mailing notices, and skip tracing
to obtain payment for medical services provided.
4
Neal I, 2015 Ark. App. 478, at 5–6, 470 S.W.3d at 284.
5
Watkins v. Ark. Elder Outreach of Little Rock, Inc., 2012 Ark. App. 301, 420 S.W.3d
477.
20
[CrossRidge] will make a reasonable effort to orally communicate with the
patient/grantor about its FAP and about how assistance may be obtained with the FAP
application process before an account is turned over to a collection agency and reports
as a negative item with a credit bureau.
Therefore, while CrossRidge ultimately forgives some debt, it admits patients with the
presumption they will pay their bill; all patients admitted are initially charged for their care,
and only when they cannot pay or do not pay are those debts forgiven.
Despite the express language of its own internal policy, CrossRidge contends it only
engages in collection practices with respect to patients injured in motor-vehicle accidents.
Is that what its policy states? No. Do we know what “reasonable effort[s]” are made to
communicate with the patient before an account is turned over to a collection agency? No.
If CrossRidge does not utilize this collections provision of its own FAP, then why have
such a policy? It is hard to comprehend how the majority discounts these clear issues of
material fact. Does CrossRidge offer free care or simply equate forgiveness of uncollectible
debt to providing free services?
This factor undoubtedly presents a factual question on which reasonable minds could
reach different conclusions and cannot be regarded as simply an interpretation of an
undisputed fact. In fact, I would go even further to say that the facts surrounding the seventh
Masterson factor involve not only facts upon which reasonable minds could reach a different
conclusion but also disputed facts regarding whether CrossRidge provides its services free
of charge. This alone should preclude an entry of summary judgment, as it presents a factual
issue for the jury.
21
Our court must follow the precedent set by the supreme court; however, rather than
applying the standard set forth in Neal III, the majority tells our supreme court how it wants
it to be and expands Neal III beyond its scope. I offer no opinion as to whether CrossRidge
is a genuine charitable organization. My intent is merely to express that this is not a situation
“where reasonable persons would not reach different conclusions based upon those
undisputed facts”; therefore, summary judgment is inappropriate. 6 I simply cannot agree
with the majority’s interpretation of Neal III and consequently must respectfully dissent.
GLADWIN, J., joins.
Waddell, Cole & Jones, PLLC, by: Paul D. Waddell and Samuel T. Waddell, for
appellant.
Wilcox Law Firm, by: Tony L. Wilcox and Blake W. Wilcox, for appellee.
6Neal III, 2019 Ark. 91, at 7, 570 S.W.3d at 461.
22